Amid Signs of Economic Weaknesses, China to Free Cash for Lending

Source: NYT

China’s central bank announced late Saturday that it would loosen monetary policy in a clear effort to stimulate the economy after the release on Thursday and Friday of a batch of economic indicators for April that were considerably weaker than most economists had expected.

The People’s Bank of China, the central bank, said on its Web site that effective on Friday it would reduce the share of deposits that banks must set aside as reserves by half of a percentage point. The reduction in the so-called reserve ratio means that banks will have more cash available to lend.

China’s General Administration of Customs announced Thursday that growth in imports had come to a virtual halt in April compared with a year earlier, an unexpected development in an economy that depends heavily on imported raw materials as well as imported computer chips, sophisticated factory tools and other high-end products used in its industrialization efforts.

China’s exports also grew half as fast as expected in April.

Read more: http://www.nytimes.com/2012/05/13/business/global/after-disappointing-figures-china-will-try-to-stimulate-economy.html